An FHA appraisal is not the same as a conventional appraisal. It serves a dual purpose: determining market value and certifying that the property meets HUD Minimum Property Standards. An FHA appraiser who identifies condition deficiencies must note them as required repairs, regardless of what the appraised value is. MLOs need to understand both functions to manage client expectations before the appraisal is ordered.
Who Can Perform FHA Appraisals
Only appraisers on the FHA Appraiser Roster can complete FHA appraisals. The roster is maintained by HUD. Non-roster appraisers, even if state-licensed and eligible for conventional work, cannot complete FHA appraisals. Verify your appraiser's FHA roster status before assigning; an appraisal completed by a non-roster appraiser must be discarded and re-ordered.
What the Appraiser Evaluates Under MPS
- ✦Foundation: active settlement, significant cracking, or water intrusion
- ✦Roof: must have at least two years of estimated remaining economic life; active leaks are a deficiency
- ✦Heating system: must maintain 50 degrees Fahrenheit in all habitable rooms
- ✦Electrical: no exposed wiring; panel must be safe and adequate for the home
- ✦Plumbing: functional water supply and waste removal; no active leaks
- ✦Lead paint: chipping or peeling paint on pre-1978 properties must be stabilized
- ✦Structural integrity: no evidence of significant structural compromise
Appraisal Transferability
An FHA appraisal is valid for 120 days and is transferable to any FHA-approved lender during that period. If a borrower changes lenders during the process, the new lender can use the same appraisal by requesting a case transfer. The receiving lender does not need to order a new appraisal unless the existing one has expired or contains errors material to the underwriting decision.
FHA Appraisal vs Home Inspection
FHA appraisers are not home inspectors and should not be treated as such. The MPS review is a surface-level condition assessment. Major mechanical, structural, or environmental issues can exist on a property and go undetected by an FHA appraiser if they are not visually apparent. Every FHA borrower should order an independent home inspection from a licensed inspector.
Aria can identify which MPS items are most commonly flagged in specific property types and age ranges, helping you set accurate expectations before ordering an appraisal. Ask at vicariointel.com.
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